Dover, not ASIC determined outcome

The timing of the closure of the Dover Financial Services license was effectively removed from the discretion of the Australian Securities and Investments Commission (ASIC) by the action taken by the licensee itself.

As both the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) have sought to represent the interests of their members working under the Dover license they have been informed by the regulator that while ASIC had been dealing with the matter, the events and timing had ultimately been dictated by Dover principal, Terry McMaster’s announcement last Friday of his intention to close the license and revoke the authority of the firm’s authorised representative advisers.

The circumstances surrounding the status of the Dover license and the revocation of the authority of its more than 400 advisers is without precedent in the financial planning industry, with the Money Management Top 100 Dealer Group research having identified the firm as being one of the largest and fastest-growing non-institutional licensees.

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Before last Friday’s events, Dover may well have emerged as Australia’s largest non-institutional dealer group in this year’s research.

The virtual unilateral action taken by Dover meant that ASIC was limited in what it could both say and do, with its only public announcement on Tuesday being an announcement around the standing of the company’s clients and its advisers together with an admonition to other Australian Financial Services License holders about the need for rigorous due-diligence when recruiting advisers from a problematic licensee.

Both the AFA and the FPA have been seeking a means of assisting members employed under the Dover license work their way through the almost unique issue and, where possible, find coverage under other Australian Financial Services Licensees with AFA chief executive, Phil Kewin, acknowledging that the circumstances surrounding Dover have made this difficult.

He said that notwithstanding some of the negative publicity which had surrounded Dover, there were many good advisers who had been left stranded by the company’s decision to so quickly revoke the authority of the advisers operating under its license.

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According to the AFR yesterday, ASIC rejected a request from Dover to allow their advisers a reasonable window of opportunity (ie until the end of the year), to apply for their own licenses or shift to another established AFSL. I hope someone gets to the bottom of this, because the situation in which these advisers have been left is beyond belief. ASIC in particular needs to come clean and fully disclose their communications with Dover. They have been given enormous power. But with that power, comes a responsibility to demonstrate they are not abusing it. I feel deeply sorry for those advisers, employees and clients caught up in this. I hope the media holds ASIC and Dover to account. We cannot have this situation repeated in the future. It is an utter disgrace.

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